Things You Should Know Before You Get Homeowners Insurance
Now that you have all the necessary information on insurance companies, there are more things you should consider before you get your homeowners insurance.
Be acquainted with the coverage options that you can get. In the widest sense, there are two types of homeowners policies: an ALL PERIL policy and a NAMED policy.
These policies are distinguished based on the PERILS they protect you against. A peril is basically anything that could pose a risk to your personal property.
The most common perils are:
- Vandalism, etc.
ALL PERIL Policy
An ALL PERIL policy is more popular because it has a broader scope. It protects you against all perils unless a peril is specifically excluded from your policy.
This kind of policy is recommended and much more convenient because it saves you from any risks that may arise.
On the other hand, a named policy does not protect you from all the perils. You can file a claim ONLY if a peril is specifically stated in the named policy. So, you want to get these if you find a gap in your standard homeowners insurance policy.
If you aren’t sure what your existing policy (or a policy that you want to buy) includes, Insurance Geek can analyze it for you.
RCV Vs. ACV
If you see the terms “RCV” and “ACV,” know that they stand for “replacement cost coverage” and “actual cash value” coverage.
A replacement cost coverage policy refers to the value of your home as it is. In other words, this is the cost it would take to rebuild your house using the same materials. Therefore, your insured home would be rebuilt to its previous state.
On the flip side, the actual cash value is your home’s market value, including the price of land and other factors.
People are divided on whether you should base your policy on its actual cash value or get the replacement cost coverage, but it’s wiser to go with the latter and make sure you are properly insured.
Most Common Home Insurance Forms
Your homeowners insurance form encapsulates more than just the physical structure of your home.
Depending on the structure of your home insurance, you’ll get multiple coverage options. These will be stated on your policy declarations page.
Most home insurance policies consist of the following parts:
Coverage A – Dwelling Coverage
Dwelling coverage is what most people link to homeowners insurance – the portion of your policy that protects the actual home structure – the walls, floor, roofing, etc. It is usually determined based on the replacement cost of your home.
What does it mean?
The replacement cost is the amount that it would take to rebuild or repair your home to the same condition and using the same materials.
Coverage B – Separate Structures
Separate structures on your property – such as sheds, garages, gazebos, fences, and more – are also protected by your homeowners insurance policy.
Coverage C – Personal Property Items
If damage due to peril is caused to your personal property belongings (i.e., stuff you own – from furniture to appliances and clothes), your policy can reimburse the loss.
P.S. If you have high-value items you’d like to secure (e.g., valuable art, heirloom, or jewelry), make sure to tell that one of your agents. S/he will connect you with a company that offers a separate endorsement for high-value possessions.
Coverage D – Loss of Use
When your home is uninhabitable for a while (due to repairs or anything similar), loss of use coverage helps defray the additional living expenses that may arise, such as transportation, a place to stay, and higher bills.
Coverage E – Personal Liability
If you or family members are held liable for any injuries or damage caused to someone, you can use personal liability to refund the court and defense expenses.
Coverage F – Medical Payments
Your home insurance policy also protects you if you are found guilty for anyone injured on your property and pays out for their medical bills.
How to Determine Your Premium?
Homeowners insurance rates depend on an array of interrelated factors. Some of them are:
- Your credit score
- The state of your home (value, age, materials, exterior construction)
- Whether a file has been claimed before
- Location (some states have a higher premium, and it gets pricier with the extreme weather conditions)
- Replacement cost
Bear in mind there’s more to it, but these factors could give you a good insight into what to expect when determining your premium.
What about Car Insurance?
If you want to secure all of your assets, you should consider getting a car insurance policy and homeowners insurance.
Moreover, combining policies from the same company will give you discounts. And who doesn’t love those?